Kraken Robotics Announces Signing of Strategic Acquisition to Expand Global Maritime Capabilities

Executive Summary

• Kraken Robotics announced a definitive agreement to acquire Covelya Group for an enterprise value of $615 million (CAD), with $480 M cash and $135 M in common‑share consideration.
• The acquisition will be partially funded by a $350 million public offering of subscription receipts at $8.50 each, and a new $150 million five‑year secured term loan.
• Combined 2025 projected revenue is $351‑$379 M with an adjusted EBITDA margin of ~24%; the deal is expected to be accretive, delivering low‑to‑mid double‑digit EPS accretion in 2027 and generating ~$10 M of cost synergies within 24 months.

Key Details

• Purchase Price: $615 M total (excluding transaction costs).
• Cash consideration: $480 M.
• Share consideration: $135 M worth of Kraken common shares (“Consideration Shares”).
• Financing Structure
• Subscription Receipts Offering: 41,177,000 receipts @ $8.50 each → gross proceeds ≈ $350 M.
  • Underwriters: Scotiabank and Desjardins Capital Markets (lead).
  • Over‑allotment option: up to an additional 15% of the base receipt amount.
  • Underwriting commission: 4.0% of gross proceeds (50% payable at offering close, 50% at acquisition close).
  • Funds held in escrow; released upon acquisition completion by Dec 31 2026, otherwise refunded with interest.
• New Credit Facility: Secured non‑revolving term loan of $150 M for five years, amending existing facilities and extending the current revolving line to a further five years.
• Closing Timeline: Acquisition expected to close in Q2 2026, subject to TSXV approval, foreign investment clearances, and customary conditions. Offering closing anticipated around March 12 2026.
• Seller Ownership Post‑Deal: Approximately 4% of Kraken’s pro‑forma common shares (excluding over‑allotment exercise). Consideration Shares subject to lock‑up with one‑third released at 12, 18 and 24 months post‑closing.
• Strategic Rationale
• Positions Kraken as a major dual‑use subsea technology supplier.
• Combined 2025 revenue midpoint $365 M; adjusted EBITDA margin ~24%.
• Expands product portfolio (navigation, positioning, communications) and geographic footprint (12 Covelya facilities across 4 continents).
• Anticipated cost synergies ≈ $10 M within two years; additional revenue synergies not quantified.
• Financial Impact
• Accretive to EPS in 2027 (low‑to‑mid double‑digit).
• Combined net leverage post‑transaction projected at 0.8×, improving over time.
• Preliminary FY 2025 results for Kraken (stand‑alone): revenue $102‑$104 M; Adjusted EBITDA $24‑$26 M.
• FY 2026 guidance (stand‑alone, excluding acquisition): revenue $165‑$175 M; Adjusted EBITDA $40‑$50 M.
• Management Comments – CEO Greg Reid highlighted complementary technologies, cross‑selling opportunities, and the creation of a “major supplier for dual‑use subsea technology.” Covelya Executive Chairman Simon Partridge echoed enthusiasm for combined growth.
• Advisors & Legal Counsel
• Financial advisors: Scotiabank (Kraken), Piper Sandler (Covelya).
• Lead bookrunners: Scotiabank, Desjardins Capital Markets.
• Legal counsel: Gowling WLG (Kraken), Goodmans LLP (underwriters), Osborne Clarke (Covelya).

Notable Quotes

“Strategically, this acquisition will provide a unique opportunity to combine two leading subsea technology providers with complementary products… the combined company will be able to provide more integrated solutions of mission‑critical systems for underwater platforms.” – Greg Reid, President & CEO, Kraken Robotics

“We have mutually admired Kraken’s technology … the transaction is extremely beneficial to both companies… we are excited about accelerating the new company’s growth trajectory.” – Simon Partridge, Executive Chairman, Covelya Group